Navy Gas & Supply Co. v. Schoech

• Decision Date: 08 January 1940
• Docket Number: 14493.
• Citation: 105 Colo. 374,98 P.2d 860
• Court: Colorado Supreme Court
• Parties: NAVY GAS & SUPPLY CO. v. SCHOECH.

98 P.2d 860

105 Colo. 374

NAVY GAS & SUPPLY CO. v. SCHOECH.

No. 14493.

Supreme Court of Colorado

January 8, 1940

Rehearing Denied Feb. 5, 1940.

In Department.

Error to District Court, Jefferson County; Samuel W. Johnson Judge.

Action by A. A. Schoech against the Navy Gas & Supply Company to recover commission on gasoline and petroleum products sold by defendant. To review an adverse judgment, defendant brings error.

Affirmed.

Van Cise, Robinson & Charlton, of Denver, for plaintiff in error.

A. D Quaintance and E. B. Evans, both of Denver, for defendant in error.

KNOUS Justice.

For the purpose of brevity we shall herein refer to the parties as they appeared in the district court where defendant in error was plaintiff and the plaintiff in error was defendant. May 11, 1934, defendant, a wholesaler of gasoline and petroleum products, in a written agreement, appointed plaintiff its agent for the tank wagon area of Golden, Jefferson county Colorado, and as his compensation promised to pay him specified commissions upon sales of such products as were made by him as its agent. In 1936 and 1937, under an agreement into which the parties duly entered June 6, 1936, as plaintiff alleges, the defendant through its authorized agent agreed to sell to the United Construction Company at the site of the Ralston Creek Dam in Jefferson county, in the construction of which it then was engaged, large quantities of gasoline, diesoline, greases and other petroleum products, upon all of which so sold and delivered defendant agreed to pay to plaintiff certain specified commissions. Upon its refusal to pay him the commissions on such sales plaintiff instituted this action. In a trial to a jury, a verdict was returned in favor of plaintiff upon which judgment was entered against defendant in the sum of $9,388.39, to review which it has brought the case here on error. The suit and recovery were for commissions at a lesser rate than fixed by the written agency contract, by reason, as plaintiff alleged, of a supplemental agreement to that effect between him and a duly authorized officer of the defendant, made prior to the execution of the United Construction Company contract so that it might submit a low competitive bid for that business.

The trial court concluded and instructed the jury that as a matter of law, under the written agency contract, plaintiff was entitled to the commissions specified therein on all of defendant's products sold and delivered in the territory in Jefferson county allotted to plaintiff, but that, because of the oral agreement alleged by plaintiff, he was limited in his recovery to the lesser amount which he asserted defendant agreed to pay. As a major basis for reversal defendant contends that this conclusion of the trial court was erroneous.

Whether or not an agent is entitled to commissions on goods sold by the principal within the territory specified in an agency agreement depends upon the intention of the parties and interpretation of the contract of employment. 3 C.J.S., Agency, p. 71, § 179; 2 Am.Jur. p. 240, § 307. 'A contract to give an 'exclusive agency' to deal with specified property is ordinarily interpreted as not precluding competition by the principal personally, but only as precluding him from appointing another agent to accomplish the result.' 2 Am.Jur. p. 240, § 307; Restatement of the Law of Agency, § 449; annotations appearing in 10 A.L.R. 816; 20 A.L.R. 1270. A large number of authorities cited by defendant are grounded upon this principle. However, on the other hand, it is well established that the grant of an 'exclusive agency' to sell, i. e., the exclusive right to sell the products of a wholesale dealer in a specified territory ordinarily is interpreted as precluding competition by the principal in any from within the designated area. 2 Am.Jur. p. 240, § 307; Restatement of the Law of Agency, § 449; 3 C.J.S., Agency, p. 71, § 179. Plaintiff contended, and the trial court held, that the relationship arising from the contract between defendant and plaintiff was of the latter character, although the contract did not so specifically provide. An exclusive selling agency for a named territory may exist in fact although the agency contract does not designate the agency as such. White Company v. W. P. Farley & Co., 219 Ky. 66, 292 S.W. 472, 52 A.L.R. 541. The use in the contract 'of the words 'exclusive agency' or 'exclusive sale' is not conclusive but, as in other cases involving interpretation, all the circumstances must be considered.' Restatement, Law of Agency, § 449. In White Company v. W. P. Farley & Co., supra, the Kentucky Court of Appeals declared a sales-agency contract which assigned the agent certain territory outside of which he was not allowed to operate in the sale of the principal's merchandise; which required him to handle no merchandise except that manufactured by the principal, and allowed a bonus commission depending upon the amount of the agent's total cash sales, conferred an exclusive agency. Analogously, the contract Before us requires the plaintiff to buy, sell and deliver the petroleum products of defendant to the exclusion of any and all other such products. As originally drawn it appointed and designated plaintiff as defendant's agent 'for the tank wagon area of Golden, Jefferson county, Colorado.'

Under date of the contract, by letter, defendant advised plaintiff: 'As a means of clarification, the tank wagon area of Golden, Colorado, is defined as follows: Jefferson County, with the exception of the South West corner which is now being served by the Morrison Auto Supply Company. This, * * * will clarify the situation to such an extent that there will be no misunderstanding as to the area you are to serve.' By this language of limitation the amendment clearly imports that the plaintiff should not be allowed to sell defendant's products outside the sharply defined area indicated and implies exclusiveness therein. Upon the principle, approved by us in Baird v. Baird, 48 Colo. 506, 111 P. 79; Hinkle v. Blinn, 92 Colo. 302, 19 P.2d 1038, and other similar cases, that the practical interpretation given to the contract by the parties while engaged in its performance and Before any controversy has arisen, is one of the best indications of their true intent, the plaintiff, as demonstrative of the exclusive agency construction, introduced evidence to the effect that previously upon at least six occasions he was paid commission by defendant upon sales made directly by it to construction contractors and to governmental agencies in plaintiff's territory. It would appear from the testimony that with the exception of the sale to the United Construction Company and possibly one other transaction, these comprised the only direct sales made by defendant in plaintiff's territory during the period involved. In most of these cases the compensation received by plaintiff was less than the commission stipulated in the written contract and in each instance he made delivery of the products. Plaintiff testified that he agreed to these reductions because of the low competitive bids essential to secure the business and without which it could not have been obtained. Although counsel for defendant objected to the introduction of much of this evidence, they argue that these transactions were merely special agreements for delivery at compensable rates and instead of supporting the position of plaintiff indicate that he did not consider his contract gave him the exclusive right to sell in the Jefferson county territory, since in that event he would have insisted on the full contract commission. Notwithstanding this argument we believe, as did the trial court, that this evidence more logically proclaims a construction of the contract by the parties consistent with plaintiff's contentions. His consent to these transactions did not alter his status as agent. Taylor Manufacturing Co. v. Key, 86 Ala. 212, 5 So. 303. The preliminary conduct of the parties in the controversy involved in the proceeding Before us, also may be considered as being indicative of the existence of an exclusive agency. From the record it appears that when it was ascertained that the United Construction Company had been awarded the contract for building the Ralston Creek Dam, the sales agent of defendant--who later closed the contract with the construction company for the use of its petroleum products--to secure the good will of that company, instructed plaintiff to serve it any way he could. Upon these instructions and their own initiative plaintiff, and his son who aided him in his business, actively and extensively assisted the construction company in removing its machinery from railroad cars, made several trips to Denver for fuel for the equipment, hauled water to the railroad siding for use in tractor radiators, and made a special price for gasoline at plaintiff's filling station to the employees of the construction company. So appreciated were these efforts that the construction company, Before the contract was made, mentioned these courtesies to the officers of the defendant company. During this period of negotiations, culminated by the alleged oral agreement hereinafter further mentioned, plaintiff was in frequent conference with the sales representatives of the defendant company with respect to securing the United Construction Company contract.

Under the terms of the agency agreement, viewed in the light of the surrounding circumstances, as well as the manner of its interpretation by the parties, we are of the opinion that the trial court did not err in instructing the jury as it did on the legal effect of the contract. The fact that it provides that the commissions were to be paid 'upon such products as are sold...